Gold & Silver Daily

Ed's Critical Reads

May 29, 2015

Bull Market Dealt A Significant Blow?

In January, we wrote a post titled “Are Bears Missing The Forest For The Trees?”. The gist of it was that while there were certainly concerning bits of evidence piling up regarding the longer-term fate of U.S. stocks, the most important factors in the immediate-term – such as the continued confirmation of new highs by the NYSE Advance-Decline Line – continued to support the bull market. That may be starting to change.

Regarding the NYSE A-D Line, we noted last week that for the first time in awhile, it failed to match the new highs set earlier this month by the S&P 500 and other large cap indices. As a refresher, the A-D Line is a cumulative total of daily advancing issues minus declining issues on the NYSE. In our view, it is an important gauge of the health of the stock market as it measures the level of strength among all stocks. The more stocks there are advancing, the more robust and resilient a rally is likely to be. Therefore, when the A-D Line failed to confirm the new high in the indices, it was an indication that fewer stocks were still participating in the rally.

Yesterday, we saw more confirmation of that. The UP trend-line of the NYSE Advance-Decline Line since the beginning of the cyclical bull market in 2009 was broken to the downside with yesterday’s poor breadth.

This interesting article put in an appearance on the Zero Hedge website at 8:07 a.m. EDT yesterday morning---and it's about a 5-minute read.  And if you don't read it, you should at least spend a minute looking at the charts.  I thank Dan Lazicki for today's first story.

View full GSD edition

Rick Santelli: Is it the top?

CNBC's Rick Santelli discusses the latest action in the bond market, and the U.S. dollar.

This brief 1:36 minute video clip found a home over at the CNBC website about 6 a.m. EDT yesterday morning---and it's the second offering in a row from Dan Lazicki.

View full GSD edition

JPMorgan CEO faults company and shareholders for disagreements

JPMorgan Chase officials have not done enough to show how well the company is run, Chairman and CEO Jamie Dimon said on Wednesday, after one-third of shareholders disapproved last week of his pay and the practice of one person holding his two jobs.

"The board talks all of the time about what they want the agenda to be," Dimon said, adding that the entire panel approved his compensation.

Dimon also faulted investors for not thinking for themselves and instead following the recommendations of shareholder advisory services Institutional Shareholder Services and Glass Lewis & Co. Both firms had argued against Dimon's pay and for an independent chairman of the board.

"God knows how any of you can place your vote based on ISS or Glass Lewis," Dimon said. "If you do that you are just irresponsible, I am sorry. And, you probably aren't a very good investor, either. I know some of you here do it because you are lazy."

Spoken like the true sociopath that he is.  This 3:12 minute CNBC video clip, complete with transcript, was posted on their website about 6:30 a.m. EDT on Thursday morning---and that makes it three in a row from Dan L.

View full GSD edition

Forex's 'last look' practice gets curbed

Two of the world's biggest currency-trading platforms plan to restrict a controversial industry practice in which banks can pull out of trades at the last moment if the market moves against them.

Thomson Reuters Corp. and BATS Global Markets Inc. will limit the practice, known as "last look," on their platforms in coming weeks in a move aimed at increasing transparency in the foreign-exchange market.

The change comes amid a broader shake-up of the trading industry prompted by concerns about traders' efforts to manipulate a range of financial markets. Markets for precious metals, interest rates, stocks, and currencies have all come under scrutiny from regulators in recent years because of allegations of inappropriate behavior.

The above three paragraphs are all of this Wall Street Journal story that's posted in the clear---and you need a subscription to read the rest.  It showed up on their Internet site on Wednesday evening EDT.  I found it embedded in a GATA release.

View full GSD edition

TTIP wins key panel vote

The Parliament’s trade committee passed a resolution backing the E.U.-U.S. free trade agreement on Thursday, including a deal on the controversial investor state dispute settlement, after the two main political groups forged a compromise.

The panel took up dozens of amendments,  but all eyes were on one vote: a compromise on the investor court struck late Wednesday between the European People’s Party and the Socialists & Democrats.

The panel voted, 29-10, for the amendment, which settles to use the ISDS reform proposal recently pitched by Trade Commissioner Cecilia Malmström as a basis for “a permanent solution for resolving disputes between investors and states … where potential cases are treated in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism,” ensuring “a consistency of judicial decisions [and respecting] the jurisdiction of courts of the E.U. and of the Member States.”

The measure is only advice to the European Commission — the Parliament itself only observes the negotiations — but Thursday’s vote could boost TTIP over the longer term. The trade agreement will need, once it is finally negotiated, to pass the Parliament. The Commission therefore needs the Parliament on its side.

This news item appeared on the website yesterday afternoon Central European Time [CET]---and it's the first contribution of the day from Roy Stephens.

View full GSD edition

Putting the 'Great' in Great Depression, Stephen Roach Warns on TPP's Currency Rules

As the U.S. Congress grapples with the ever-contentious Trans-Pacific Partnership – President Barack Obama’s signature trade legislation – a major stumbling block looms. On May 22, the Senate avoided it, by narrowly defeating – 51 to 48 – a proposed “currency manipulation” amendment to a bill that gives Obama so-called “fast-track” authority to negotiate the TPP.  But the issue could be resurrected as the debate shifts to the House of Representatives, where support is strong for “enforceable currency rules.”

For at least a decade, Congress has been focusing on currency manipulation – a charge leveled at countries that purportedly intervene in foreign-exchange markets in order to suppress their currencies’ value, thereby subsidizing exports. In 2005, Senators Charles Schumer, a liberal Democrat from New York, and Lindsey Graham, a conservative Republican from South Carolina, formed an unlikely alliance to defend beleaguered middle-class US workers from supposedly unfair competitive practices. Stop the currency manipulation, went the argument, and America’s gaping trade deficit would narrow – providing lasting and meaningful benefits to hard-pressed workers.

A decade ago, the original Schumer-Graham proposal was a thinly veiled anti-China initiative. The ire that motivated that proposal remains today, with China accounting for 47% of America’s still outsize merchandise trade deficit in 2014. Never mind that the Chinese renminbi has risen some 33% against the US dollar since mid-1995 to a level that the International Monetary Fund no longer considers undervalued, or that China’s current-account surplus has shrunk from 10% of GDP in 2007 to an estimated 2% in 2014. China remains in the crosshairs of US politicians who believe that American workers are the victims of its unfair trading practices.

While this argument has great emotional and political appeal, it is deeply flawed, because the United States has an insidious saving problem. America’s net national saving rate – the sum total of household, business, and government saving (adjusted for the depreciation of aging capacity) – currently stands at 2.5% of national income. While that is better than the negative saving rates of 2008-2011, it remains well short of the 6.3% average of the final three decades of the twentieth century.

This commentary appeared on the Zero Hedge website at 6:30 p.m. EDT yesterday evening---and it's another offering from Dan Lazicki.

View full GSD edition

Germans turn their backs on renting with new property boom

Are we calling peak German property? Or are we witnessing a new German housing market in gestation, driven by imbalances between supply and demand, fired by an urge to buy not rent?

Germany has one of the lowest rates of home ownership in Europe. Just 15% of Berliners own property. That figure is rising. "Germany is counter-cyclical to Britain," says Hilton. "In Britain, property ownership is in decline. In Germany it is the other way round."

Meanwhile, supply is constrained and will remain so. "Although new-build property is coming on, there isn't anything like enough of it. Last year, 4,000 properties were built in Berlin. The demand is for 20,000."

This brief article was posted on the Internet site on Wednesday morning EDT---and I thank reader A.V. for sending it our way.

View full GSD edition

Poland's Duda rises over Brussels

The surprise victory of Andrzej Duda in Poland’s presidential runoff was greeted with shock in Brussels, and raised pressing questions about the future of Warsaw’s policies toward as well as influence in the EU.

The European capital had long factored in a second term for incumbent Bronisław Komorowski. Dismissed as an unknown and long-shot, Duda triumphed in Sunday’s elections by three percentage points, heralding the resurgence of a more socially conservative and Euroskeptical strand of Polish politics.

The 43-year-old lawyer comes from the Law and Justice (PiS) bloc of Jarosław Kaczyński, a former prime minister who will lead the party — now brimming with momentum and confidence — into parliamentary elections in the autumn. Komorowski’s loss reflected voter fatigue with his centrist Civic Platform (PO), which has ruled Poland since 2007 and comes into the election campaign on a weaker foot. This unexpected political shift is also forcing a rethink of Poland by its main EU partners, which view Warsaw as the leading EU power east of Germany.

This is the second story of the day from the website.  This one appeared there at 5:30 a.m. Central Europe Time [CET] yesterday morning---and I thank Roy Stephens for sending it our way.

View full GSD edition

Greece Has Not Asked Switzerland to Name Suspected Tax Evaders

Greece is not one of the countries that have asked Swiss authorities to release on the web the names of suspected tax evaders who have bank accounts in Switzerland. Switzerland has started uploading on the internet the names of Swiss bank depositors who are probed for tax evasion in their countries. This was after several countries have asked Switzerland to release the names in order to tackle tax evasion.

According to a report in Swiss Sunday newspaper Sonntagszeitung, Switzerland has received numerous formal judicial requests from tax authorities of many countries who suspect tax evaders who have funds in Swiss banks. The Swiss government decided to release the names of companies and the names, date of birth and nationality of individuals in its federal gazette, where official texts are published.

Germany, Spain, India, the Netherlands, Great Britain, U.S.A. and South Korea are among the countries that have made the request. Greece, however, is not among the countries requested the publication since there is not a single Greek name or company on the published list.

This news item was posted on the Internet site on Tuesday---and it's the first of two stories from Harry Grant, our man in Greece.

View full GSD edition

"The Greek Endgame is Here": Probability of IMF Default Now 70%, Says Deutsche Bank

As the farcical negotiations between Greece and its creditors unfold ahead of a June 5 IMF payment and as Alexis Tsipras is forced to spread false hope just to avoid a terminal bank run, a picture of the Greek endgame has emerged. 

We’ve discussed the political implications of both an agreement or a Grexit and we’ve also taken an in-depth look at what a missed IMF payment means for the country’s EU creditors. On the political front, the troika is intent on sending a strong message to leftist political parties (such as Spain’s Podemos and Portugal’s “ascendant" socialists) that using the threat of a euro exit as a way to extract austerity concessions is not a viable negotiating strategy. What this amounts to is an attempt on the part of the “institutions” to subjugate the political process to economics. In terms of skipping a payment to the IMF — who, as a reminder, effectively paid itself earlier this month by allowing Greece to tap its SDR reserves to pay the bills — there are a number of cross acceleration concerns which you can review by referring to the following graphic.

Now, amid accelerating deposit outflows and an hourly flow of conflicting headlines, Deutsche Bank is out with a fresh take on the Greek endgame including an analysis of both the political wrangling that would need to take place in order for parliamentary approval of concessions to creditors and the mechanics of a default to the IMF.

This longish commentary put in an appearance on the Zero Hedge website at 11:51 a.m. EDT yesterday---and it's courtesy of Dan L. as well.  There was another story about this posted over at The Telegraph yesterday.  It's headlined " IMF warns of Grexit risk as judgment day approaches"---and I thank Roy Stephens for sending it our way in the wee hours of this morning.

View full GSD edition

G-7 Weighs In on Greece as Government Told to Be Serious

Germany and France told Greece to get serious about striking a deal on rescue aid, as ministers from the world’s biggest economies urged a resolution of the crisis to stop it from spilling beyond Europe’s borders.

Delegates at a meeting of Group of Seven finance chiefs in Dresden, Germany, diverged from the main program to push back against Greek claims that an agreement is near and called for stronger efforts to resolve the standoff. The gathering in a former palace brings together Greece’s three creditor institutions as well as Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of his euro-area colleagues.

“At some point, the discussion has to be transformed into something on paper,” French Finance Minister Michel Sapin said in an interview en route to Dresden. “You need a draft.”

While Greece isn’t on the G-7’s official agenda and the group has no mandate to make a decision, the topic has so far dominated policy makers’ public comments. Time is running out for the Mediterranean nation to receive funding ahead of almost 1.6 billion euros ($1.74 billion) in International Monetary Fund payments scheduled for next month, with the first transfer due June 5.

This Bloomberg story, complete with an embedded 2:30 minute video clip, showed up on their Internet site late Wednesday afternoon Denver time---and I thank West Virginia reader Elliot Simon for bringing it to our attention.

View full GSD edition

‘Greek Island Kos Not a Party Paradise But a Refugee Shelter’

“Almost 1,200 migrants – some crammed onto overcrowded inflatable dinghies – have been picked up by Greek authorities in the eastern Aegean Sea in the past two days,” correspondents for the British newspaper Daily Mail Jenny Stanton and Mario Ledwith mentioned in their article published on Tuesday.

Although the article is intended to highlight the plight of refugees arriving in Dodecanese islands from neighboring Turkey, it mainly focuses on the island of Kos, a popular tourist destination for U.K. teens.

According to the British newspaper, “after Italy, financially crippled Greece is the main destination for refugees, mostly from war-ravaged Syria plus economic migrants seeking a better life in the E.U.” with the total new arrivals exceeding 30,000 this year.

Kos is situated approximately two miles from the southwestern Turkish region of Bodrum and the journey from the Turkish port to the Greek holiday island takes around 20 minutes. In order for the desperate migrants to cross the Aegean Sea in search for a better life, up to €800 should be paid to smugglers for a place on a boat.

This story showed up on the Internet site yesterday sometime---and once again I thank our man in Greece, Harry Grant, for sharing it with us.

View full GSD edition

Bucharest's corruption crackdown may be doing the country more harm than good

On paper, the east Romanian port town of Constanta looks like an economic success story. With investments pouring into renewable energy, shipping, real estate and agriculture, GDP per capita is 16% higher than the country average, in line with the most prosperous cities in Europe.

But such development has been made possible under the maverick reign of the city's mayor, Radu Mazare, who was arrested in April under accusations that he had taken €9m in bribes – and the scars of his rule are visible everywhere. The historic centre looks like a city abandoned. Crumbling Ottoman-era buildings stand derelict on streets that run to dirt halfway. Roads stop abruptly where brand new mansions have been erected, jostling to get a view of the sea. Stray dogs roam the roofs of unfinished tower blocks. Queues wind out the front doors of hospitals.

"Mazare is a king in Constanta," says Sebastian Bodu, a member of the European Parliament and former president of the National Agency for Fiscal Administration. "The city is his empire. He has established a system where any economic initiative has to go through him. Now he's been arrested, nothing happens – no one knows what to do."

Mazare's reputation rests as much on his ability to play the clown as it does on his open embrace of foreign investment. He has dressed as a Nazi general and a Roman emperor for the press; posed on a silver throne surrounded by naked models for the cover of Playboy magazine, and regularly arrives for political debates dressed in full Che Guevara garb, cigar included. The proud owner of a fleet of vintage sports cars, multiple houses and an estate on Madagascar – despite earning an official salary of just €495 a month – Mazare has somehow managed to keep the public's trust. At the last poll, he was re-elected with 62% of the votes.

You couldn't make this stuff up!  This very interesting article put in an appearance on the Internet site on Wednesday---and it's another offering from reader A.V.

View full GSD edition

Putin: FIFA-linked arrests are U.S. attempt to thwart Blatter re-election

The FIFA-linked arrests on the eve of the re-election of the organization’s chief are an obvious attempt to thwart Sepp Blatter’s re-appointment, Vladimir Putin said, answering journalists’ questions. He added it’s another example of US meddling abroad.

Russian President Vladimir Putin has said the US could be selfishly motivated for its own gain, as was the case with Edward Snowden and Julian Assange.

“Unfortunately our American partners are using these methods in order to achieve their own selfish gains and it is illegal to persecute people. I would not rule out that in regards to FIFA, the same thing could be happening, though I do not know how it will end,” he said.

“However, the fact that this is happening right on the eve of the FIFA presidential elections, gives one this exact impression.”

This very interesting news item appeared on the Russia Today Internet site at 9:13 a.m. Moscow time on their Friday morning, which was 2:13 a.m. EDT in Washington.  It is, of course, courtesy of Roy Stephens.

View full GSD edition

UBS puts 'buy' recommendation on gold stocks, but Newcrest is a 'sell'

Gold stocks are set to boom thanks to the commodity's price and merger activity, with UBS slapping a buy on its entire gold coverage list with the exception of Newcrest and Independence Group.

UBS put out the note as the sector enjoys a boost from a wave of mergers and acquisitions this year, with 26 deals worth in total $1.7 billion.

Gold has recovered from its March lows of $US1150 an ounce and is now trading near $US1,188 (AUS$1,533).

"With the exception of Newcrest and Independence Group, we have buy ratings on our entire gold coverage list," said UBS.

This gold-related news item showed up on The Sydney Morning Herald website on their Wednesday---and one would assume that if Aussie gold stocks are a 'buy'---most of the rest of the world's gold miners would fall into that category as well.  I thank Casey Research's own Jeff Clark for sending it our way yesterday.

View full GSD edition

The Message from Last Week’s Headlines: Don’t Dare Sell Your Gold!

Have you noticed the trend in mainstream headlines over the past week?

The gold price may be stagnant, but forces behind the scenes signal that something big is gelling.

What conclusion would you draw from this rundown of recent headlines?

It’s one reason I bet Harry Dent that gold won’t fall to his predicted $700 level. I’m so confident I put up my own gold. He did, too.

This commentary by BIG GOLD's Jeff Clark showed up on the Casey Research website yesterday---and it's worth a few minutes of your time.

View full GSD edition

Austrian central bank to repatriate some gold from London

Austria's central bank plans to repatriate some of its gold reserves from Britain after facing criticism for storing too much of the precious metal abroad, the bank said today.

The Austrian National Bank, which administers Austria's 280 tonnes of gold reserves, said by 2020 50 percent of the reserves would be kept in Austria, 30 percent in London, and 20 percent in Switzerland.

The bank currently keeps 80 percent of its gold reserves, which have been unchanged since 2007, in Britain, 17 percent in Austria and 3 percent in Switzerland.

In February the bank rejected criticism of its gold storage policy from the country's Court of Audit. At the time it insisted that keeping the bulk of the reserves in London was in the country's best interests but also said a policy review was under way.

The above four paragraphs are all there is to this brief Reuters story that was filed from Vienna yesterday.  I found it on the Internet site.  There was another tiny Reuters story on this issue---and this one bears the Chris Powell headline " Austrian central banker acknowledges general trend toward gold repatriation"---and it was another story I found in a GATA release.

View full GSD edition

The Guardian: Austrian repatriation arises from fear of new Auric Goldfinger and Pussy Galore

Until now the Austrian National Bank has relied on the Bank of England to watch over most of its L6.7 billion gold reserves. The BoE looks after much of the world's gold as most central banks send some of the stocks to London for safekeeping.

Now the BoE's stock of the precious metal will be reduced to 30%, while Austria will hold 50% and Switzerland 20%.

The Austrian authorities appeared to be conscious of the perils of bulk-storing gold in the manner of Fort Knox in the US, made famous by Auric Goldfinger's attempted heist in the third James Bond film.

The fictional villain seeks to corner the gold market in his position as treasurer of Smersh, the arch enemy of MI6. However, the decision was taken earlier this year, before the Hatton Garden robbery, which saw millions of pounds of precious metals and jewels stolen and resulted in mass arrests this month.

How does this stuff get past the editors, I wonder?  The above is Chris Powell's headline---and the actual headlined from The Guardian yesterday reads "Austria's Central Bank to Repatriate £3.5 Billion of Gold Reserves from U.K."  This is another Austrian gold-related story from the Internet site.

View full GSD edition

Swiss gold exports to Asia fell considerably in April

Gold is trading at around $1,190 per troy ounce this morning, having recovered only slightly from the two-week low it recorded yesterday. In other words, the correction of the EUR/USD exchange rate has not been reflected in the gold price. In fact, it has even meant that gold in euro terms has fallen to just shy of €1,090 per troy ounce. 

According to figures published this morning by the Swiss Federal Customs Administration, Switzerland exported 143.9 tonnes of gold in April, 36% less than in March. More than three quarters of this total was shipped to Asia, gold exports to India declining by 28% month-on-month to 51.8 tonnes and those to China even plummeting 67% to 15.1 tonnes. By contrast, exports to Hong Kong surged by 36% to a good 43.4 tonnes, notes Commerzbank. 

The Census and Statistics Department of the Hong Kong government will be publishing figures for gold trading with the Chinese mainland today. It will then become clear whether the weak Chinese gold demand in the first quarter was merely temporary or has spilled over into the second quarter. According to data from the International Monetary Fund, only Kazakhstan bought any sizeable quantity of gold in April (2.4 tonnes) apart from Russia. The figures show that the central banks acquired only around 11 tonnes of gold in total to diversify their currency reserves last month. Sales on a net basis are unlikely, however. According to the World Gold Council, central banks were net gold purchasers in the first quarter for already the seventeenth quarter in a row.

The above three paragraphs are all there is to this short article that appeared on the website at 9:22 a.m. BST yesterday, which was 4:22 a.m. EDT in New York.  I found it on the Sharps Pixley website.

View full GSD edition

China’s Hong Kong gold imports fall a third month

China’s net gold imports from Hong Kong fell a third month as buyers deferred purchases in anticipation of further price drops and amid increasing government scrutiny of bullion trading.

Net inbound shipments dropped to 46.6 metric tonnes last month from 61.8 tons in March and 65.4 tonnes a year earlier, according to data compiled by Bloomberg from the Hong Kong Census and Statistics Department released Thursday. Mainland buyers purchased 55.2 tonnes, including scrap, compared with 72.1 tonnes a month earlier. Exports to Hong Kong from China fell to 8.5 tonnes. Mainland China doesn’t publish such data.

Purchases by the biggest buyer declined to the lowest in eight months amid speculation that the U.S. Federal Reserve will raise interest rates. China’s tax authorities will audit all domestic gold traders, people familiar with the matter said this month, as the government clamps down on the practice of using fake precious-metals trade to mask capital flows.

As has been said by many commentators, including this writer, you can no longer use China's imports through Hong Kong as a proxy for China's gold demand, but the mainstream media never stops trying to spin it that way.  This Bloomberg article is from yesterday---and it found a home on the Internet site.

View full GSD edition

Ted Butler: Curiouser and Curiouser

The defective price discovery process has little to do with the price change during the reporting week, which was largely unremarkable. Instead, it has everything to do with the massive quantities of equivalent metal changing hands by two different groups of speculators in an orgy of private bucket shop trading that is dictating silver prices to the rest of the world.

Look, if these two groups of speculators, managed money traders on one side and speculators we call commercials on the other side wanted to wager massive bets and kept their betting to themselves, then no problem – they can have at it. But by dictating silver prices to everyone else in the world involved in silver investing or mining, their private betting becomes a very big problem.

I have only one absolute must read in today's column---and this is it.  I urge you to pick out a small handful of silver companies you own shares in---and e-mail them Ted's commentary, asking at the same time what they plan to do for themselves and their shareholders, as enough is enough.  That's what I'm going to be doing this weekend.  This excellent commentary was posted on the Internet site yesterday.

View full GSD edition

May 28, 2015

Humiliated McDonalds to Stop Reporting Monthly Sales

What do you do when month after month you have nothing but bad data to report, such as in this case McDonalds with its weekly comparable store sales shown on the ugly charts below?

Simple: you have two choice - you either seasonally adjust the data (or in the case of U.S. GDP, double-seasonally adjust it), or if that is not possible since unlike U.S. GDP, your numbers are at least somewhat indicative of underlying reality, you stop reporting them altogether.

That's what McDonalds just did.


This commentary appeared on the Zero Hedge website at 9:41 a.m. EDT on Wednesday morning---and today's first story is courtesy of reader M.A.

View full GSD edition

Investor Bill Gross: Bet against Bunds 'well timed, not well executed'

Bill Gross, the widely followed investor, admitted in his June Investment Outlook on Wednesday that his bet against the German Bund market was well timed but not profitable.

"My famous (infamous?) 'Short of a lifetime' trade on the German Bund market was well timed but not necessarily well executed," Gross, who runs the Janus Global Unconstrained Fund, wrote in his latest report to clients titled "Mr. Bleu."

Gross's Janus Global Unconstrained portfolio is down 0.40 percent so far this year, underperforming its peers by 1.88 percentage points and lagging 93 percent of its non-traditional bond category, according to Morningstar data on Tuesday.

This Reuters article from around 8 a.m. EDT yesterday, was picked up by the CNBC website---and the second story of the day is courtesy of Dan Lazicki.

View full GSD edition

Billionaire Hedge Fund Manager Paul Singer Reveals the "Bigger Short"

First it was Gross, then Gundlach. Now billionaire hedge fund manager Paul Singer of Elliott Management has unveiled what he believes is the trade of this generation: being short "long-term claims on paper money, i.e., bonds." He calls it the "bigger short." First hinted at during the Grant's Spring 2015 conference, he now goes into excruciating detail.

Select excerpts from Paul Singer's latest letter.

The Big Short, of course, refers to short positions in credit in the period 2005-2007, more specifically structured credit. To be even more precise, it refers to subprime residential mortgage securitizations. It is also the name of a best-selling book by Michael Lewis about the housing and credit bubble. It was called the Big Short because many forms of credit were so overpriced that the risk/reward of taking on short positions before the financial crisis was extraordinarily favorable.

Today, six and a half years after the collapse of Lehman, there is a Bigger Short cooking. That Bigger Short is long-term claims on paper money, i.e., bonds.

This longish commentary was posted on the Zero Hedge Internet site at 6:07 p.m. EDT yesterday evening---and it's the second offering in a row from Dan Lazicki.

View full GSD edition

Dr. Lacy Hunt on U.S. Endgame and Greatest Risk to Financial Markets

Wondering why economic growth can’t seem to take off or why inflation continues to fall? According to Dr. Lacy Hunt, Executive Vice President of Hoisington Investment Management, it all comes down to debt, which helps to explain most of the world’s economic problems today. Lacy describes the six characteristics of over-indebted economies, the most toxic type of debt to economic growth and financial stability, his view of the endgame, and why he still sees "significant value" in long-dated US Treasury bonds.

This partial transcript, along with a 6:25 minute audio clip was posted on the Internet site yesterday sometime---and it's another contribution from Dan Lazicki.

View full GSD edition

Fed's Lacker: Letting Banks Fail Will Restore Market Discipline

Policymakers must ensure that financial industry creditors do not expect government bailouts and must be willing to let firms fail in order to restore market discipline, a top Federal Reserve official said.

The remarks by Jeffrey Lacker, president of the Richmond Federal Reserve Bank, repeated much of what he has previously said about what regulators need to do to make the financial system safer. Lacker, a voting member this year on the Fed's policy-setting committee, did not discuss monetary policy.

The long-term solution to ending too-big-to-fail banks is restoring market discipline "so that financial firms and their creditors have an incentive to avoid fragile funding arrangements," Lacker said in remarks prepared for delivery at the Louisiana State University Graduate School of Banking.

His remarks come amid heightened concern among Fed officials about financial stability as the U.S. central bank prepares to raise interest rates. But Lacker says less regulation, not more, is needed to make the system safer.

It's incredible what passes for 'news' these days---and there's no way on God's green earth that the U.S. government will ever allow any U.S. bank, like JPMorgan for instance, to fail.  I don't know what's in the Kool-Aid this guy is drinking.  This 'story' put in an appearance on the Internet site at 7:43 a.m. EDT yesterday morning---and I thank Brad Robertson for sending it.

View full GSD edition

The Farce is Complete: FIFA, Qatar Donated to the Clinton Foundation

Earlier today, when commenting on the latest global criminal scandal, that of "rampant corruption" at FIFA, we - jokingly - said: "And now we just sit back and wait to see how many of the defendants sent "donations" to the Clinton Foundation and how many speeches Hillary and/or Bill gave at the Baur au Lac in the past two decades."

Then we decided to make sure the joke wouldn't be on us and that FIFA hadn't indeed donated to the Clinton foundation.

The joke was on us... because not only did FIFA donate to the Clinton Foundation...

This very interesting new story showed up on the Zero Hedge website at 2:14 p.m. EDT yesterday---and I thank Dan L. for finding it for us.

View full GSD edition

LIBOR riggers included Bank of England's 'Hammer' in their e-mail plotting

A senior Bank of England official received emails that were part of an alleged campaign to rig benchmark interest rates, according to evidence presented in a London trial Wednesday.

Martin Mallett, who at the time was the chief currencies dealer at the Bank of England, was among a couple dozen recipients of emails sent in 2007 by brokers allegedly working at the behest of former bank trader Tom Hayes. The recipients were blind carbon-copied on the messages.

In the emails, the brokers sent out daily suggestions for where a variety of banks should set the London interbank offered rate, or Libor. Mukul Chawla, the prosecutor trying Mr. Hayes, said those emails were used in an attempt to skew interest rates for the benefit of Mr. Hayes, at the time a trader in Tokyo at UBS AG .

Mr. Mallett, nicknamed “The Hammer,” was sent the emails at his address.

This story was posted on The Wall Street Journal website yesterday morning sometime---and I found it embedded in a GATA release.  The actual headline reads "Bank of England Official Received E-mails Relating to Libor Manipulation, Prosecutor Says".  The Zero Hedge spin on this is headlined " Need to Manipulate Markets? Just E-mail the Bank of England at"---and I thank Dan Lazicki for that as well.

View full GSD edition

G7 finance ministers, central bankers to meet in Dresden

Finance ministers and central bank governors of the Group of Seven wealthiest nations meet in Dresden this week to discuss the health of the global economy and financial regulation, with Greece also on the agenda.

German Finance Minister Wolfgang Schaeuble has invited his counterparts and their central bank chiefs from Britain, Canada, France, Italy, Japan and the United States, for a meeting starting Wednesday and "an in-depth exchange of views" in the eastern German city.

But there will also be other experts seated around the table, Schaeuble said in an interview with German public radio Deutschlandfunk at the weekend.

For the first time, "we've also specifically invited a number of the world's leading economists and monetary policy experts so that we can think about and find better solutions" to today's pressing economic policy issues, he said, such as striking a balance between budget consolidation and investment, and the rules of the international financial architecture.

I don't care how many so-called experts they invite, nothing will change.  This AFP story, filed from Berlin yesterday morning, was picked up by the Internet site---and it's the first offering of the day from Roy Stephens.

View full GSD edition

With Greece "Nowhere Close" to Deal, Depositors Pull €300 Million From Banks In Single Day

On Tuesday, Greece postponed a scheduled Eurogroup meeting in Brussels without offering a reason as officials conducted “preparatory” discussions and held an evening teleconference with creditors. Face-to-face meetings will take place today with just 9 days to go until June 5 when Athens will miss a payment to the IMF, triggering an unprecedented default the repercussions of which no one can accurately predict. 

Also on Tuesday, Greek FinMin Yanis Varoufakis allegedly told Greek reporters that one measure under consideration to help stem the outflow of deposits from Greek banks was a levy on ATM withdrawals designed to encourage the use of credit cards over cash, a rather ironic suggestion coming from a government crippled by debt. The Finance Ministry was quick to deny that such a levy was being considered because after all, one way to ensure that ATM lines will get quite a bit longer is to suggest that depositors will soon be subject to a levy on withdrawals. Unfortunately, it appears as though the move to dispel the ATM tax “rumor” came too late because according to Kathimerini, deposit flight accelerated meaningfully on Tuesday.

This Greece-related story showed up on the Zero Hedge website at 7:48 a.m. EDT on Wednesday morning---and I thank reader M.A. for passing it around.

View full GSD edition

Creditors dash Greek optimism as U.S. warns country faces an 'abyss' of a euro exit

European creditors dashed hopes that Greece was finally nearing the end-stage of its bail-out negotiations, insisting both sides remained far apart on securing the embattled country’s future in the eurozone.

Greek stock markets jumped after comments from prime minister Alexis Tsipras that the country was "close" to a deal, following reports the two sides had begun the process of drafting an agreement.

"We have made many steps. We are on the final stretch towards a positive deal," said Mr Tsipras.

"This agreement will be positive for the Greek economy, this agreement will redistribute the [financial] burdens and I believe that, very soon, we will be in a position to present more information," said the Leftist premier.

Athens' benchmark closed nearly 4pc up on the day.

This news item appeared on The Telegraph's website early yesterday morning, but has been edited in the interim---and it has also undergone a headline change, as it used to read "Greek markets jump as Alexis Tsipras says Greece is on the 'final stretch' towards bail-out deal".  It's the second contribution of the day from Roy Stephens.

View full GSD edition

The G-7's Problem: Can the World Deal With a Greek Default?

The world’s top finance ministers and central-bank chiefs meeting in Dresden this week are already struggling to stick to an agenda set by their German hosts that doesn’t mention Greece.

In a sign of deepening global concern over the country’s stumbling bailout talks, U.S. Treasury Secretary Jacob L. Lew spoke with Greek Prime Minister Alexis Tsipras on Wednesday for the second time in less than a week and told a London audience that “everyone has to double down” on reaching an accord. European Commission Vice President Valdis Dombrovskis denied a Greek government statement that a deal is close.

The Group of Seven meeting starting on Wednesday will officially focus on big-picture themes of economic growth, tax evasion and strengthening the global financial architecture. Yet the most pressing matter for many of the policy makers attending is whether Greece can stay in the euro, and whether the world can handle the consequences if it can’t.

This Bloomberg story from 5 p.m. Denver time on Tuesday afternoon has a lot of similarities to the AFP story further up headlined "G7 finance ministers, central bankers to meet in Dresden".  But there are enough differences that I though it worth posting on its own.  I thank West Virginia reader Elliot Simon for bringing it to our attention.

View full GSD edition

Fossil industry faces a perfect political and technological storm

The political noose is tightening on the global fossil fuel industry. It is a fair bet that world leaders will agree this year to impose a draconian “tax” on carbon emissions that entirely changes the financial calculus for coal, oil, and gas, and may ultimately devalue much of their asset base to zero.

The International Monetary Fund has let off the first thunder-clap. An astonishing report - blandly titled "How Large Are Global Energy Subsidies" - alleges that the fossil nexus enjoys hidden support worth 6.5pc of world GDP.

This will amount to $5.7 trillion in 2015, mostly due to environmental costs and damage to health, and mostly stemming from coal. The World Health Organisation - also on cue - has sharply revised up its estimates of early deaths from fine particulates and sulphur dioxide from coal plants.

The killer point is that this architecture of subsidy is a "drag on economic growth" as well as being a transfer from poor to rich. It pushes up tax rates and crowds out more productive investment. The world would be richer - and more dynamic - if the burning of fossils was priced properly.

Well, dear reader, I'll believe it when I see it.  This Ambrose Evans-Pritchard offering showed up on the Internet site at 5:23 p.m. BST yesterday afternoon---and it's certainly worth reading.  It's the first of three in a row from Roy Stephens.

View full GSD edition

Russia, Venezuela Agree on $14 Billion Investment in Oil, Gas Sphere

The investment is aimed at doubling oil production in the coming years, Maduro said on Wednesday, after a meeting with CEO of Russian oil giant Rosneft Igor Sechin in Venezuela's capital, Caracas.

The agreement concerns the development of the so-called Orinoco Belt — one of the richest oil reserves in the world — and projects in the gas sector, according to Maduro.

Since last summer, global oil prices have drastically dropped due to oversupply in the market. In November, the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain its oil production levels, contributing to a further drop in prices and severe crises in many oil exporting nations, particularly Venezuela.

This brief article appeared on the Internet site at 3:14 a.m. Moscow time this morning which was 8:14 p.m. EDT in Washington Wednesday evening.  I thank Roy Stephens for finding it for us.

View full GSD edition

Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Tony Blair’s time as Middle East envoy representing the US, Russia, the U.N. and the E.U. has finally come to an end. Eight years after he took up the role, Blair tendered his resignation and left one question: how come a war criminal ever became a “peace envoy” in the first place?

The people of the Middle East – and much of the world – have been asking this question ever since Blair was appointed the Quartet’s man in Jerusalem, solemnly and hopelessly tasked to bring “peace” between Israelis and Palestinians. Was his new mission supposed to wash the blood from his hands after the catastrophe of the Bush-Blair invasion of Iraq and the hundreds of thousands of innocents who died as a result?

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – Blair’s appointment was an insult. The man who never said he was sorry for his political disaster simply turned up in Jerusalem four years later and, with a team which spent millions in accommodation and air fares, managed to accomplish absolutely nothing in the near-decade that followed.

This short must read commentary by Robert Fisk was posted on the Internet site early this morning in London---and my thanks go out to Roy Stephens for sliding it into my in-box very late last night Denver time.

View full GSD edition

Washington Blows Itself Up With Its Own Bomb -- F. William Engdahl

These are sad days in Washington and Wall Street. The once unchallenged sole Superpower at the collapse of the Soviet Union some quarter century ago is losing its global influence so rapidly that most would not have predicted anything comparable six months ago. The key actor who has catalyzed a global defiance of Washington as Sole Superpower is Vladimir Putin, Russia’s President. This is the real background to the surprise visit of US Secretary of State John Kerry to Sochi to meet with Russian Foreign Minister Sergei Lavrov and then a four hour talk with “Satan” himself, Putin.

Far from a “reset” try, Washington’s hapless geopolitical strategists are desperately trying to find a better way to bring the Russian Bear to her knees.

Kerry was clearly sent to Sochi to sniff out possible soft points for a renewed assault in the future. He told the rogue U.S.-backed lunatics in Kiev to cool it and respect the Minsk cease-fire accords. The demand came as a shock in Kiev. U.S.-installed Prime Minister Arseniy Yatsenyuk told French TV, “Sochi is definitely not the best resort and not the best place to have a chat with Russian president and Russian foreign minister.

At this juncture the only thing clear is that Washington has finally realized the stupidity of its provocations against Russia in Ukraine and globally. What their next scheme will entail is not yet clear. Clear is that a dramatic policy shift has been ordered on the Obama administration from the highest levels of US institutions. Nothing else could explain the dramatic shift. If sanity replaces the neo-con insanity remains to be seen. Clear is that Russia and China are resolute about never again leaving themselves at the mercy of an incalculable sole superpower. Kerry’s pathetic attempt at a second Russia “reset” in Sochi will bring Washington little at this point. The US Oligarchy, as Shakespeare’s Hamlet put it, is being “hoist with their own petard,” as the bomb maker blows himself up with his own bomb.

This commentary by Engdahl put in an appearance on the Internet site on Monday---and is an absolute must read for any serious student of the New Great Game.  I thank South African reader B.V. for bringing it to our attention.

View full GSD edition

Global trade just saw its sharpest drop since the financial crisis

The CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, just released its latest Merchandise World Trade Monitor, which covers global import volumes as well as global export volumes. The index dropped 0.1% in March to 136.5, after having already dropped 0.7% in February, and 1.7% in January. The index, which was set at 100 in 2005, is now down 2.5% from the peak of 140.0 in December. That 3.5-point decline was the sharpest since the Financial Crisis.

This chart, going back to January 2012, doesn’t exactly inspire confidence in the current state of the global economy.

This commentary from the Internet site was picked up by the website on Tuesday---and it's something I found in yesterday's edition of the King Report.

View full GSD edition

Patrolling the hood from (China) sea to shining sea -- Pepe Escobar

If only Mad Men in real life were like Don Draper – channeling his true inner self, after many a rocky season, to finally click on “I’m OK, you’re OK.”

Instead, we have a bunch of (Pentagon) madmen provoking every major geostrategic competitor all at once.

The Masters of War at the self-described “Don’t Do Stupid Stuff” Obama administration are now announcing they’re ready to dispatch military aircraft and ships within 18 kilometers of seven artificial islands China has built up in the Spratly Islands.

Beijing’s response, via the Global Times, couldn’t be other than There Will be War; “If the United States’ bottom line is that China has to halt its activities, then a U.S.-China war is inevitable in the South China Sea … The intensity of the conflict will be higher than what people usually think of as ‘friction’.

This must read commentary by Pepe appeared on the Asia Times website yesterday---and it's the final contribution of the day from Roy Stephens and, once again, I thank him on your behalf.

View full GSD edition

Chinese mining group buys $710 million in gold and copper assets

Zijin Mining Group will buy US$710 million worth of gold and copper mining assets from two Canadian companies in the Democratic Republic of Congo and Papua New Guinea with funds raised through a private placement in the Shanghai stock market.

Zijin told the Shanghai and Hong Kong stock exchanges on Tuesday it would buy a 49.5 per cent stake in the Kamoa copper project in the Democratic Republic of Congo from Ivanhoe Mines for US$412 million.

Zijin already owns 9.9 per cent of Ivanhoe, which recorded a net loss of US$52.9 million last year following a net loss of US$80.6 million in 2013.

Fujian-based Zijin will also pay Barrick Gold Corp US$298 million for a 49.5 per cent interest in the Porgera gold mine in Papua New Guinea.

This news item showed up on the South China Morning Post on their Wednesday---and I found it embedded in a GATA release.

View full GSD edition

Direxion Asset Management closing 3X leveraged gold ETF

The Direxion Shares ETF Trust II has decided to liquidate and close the Direxion Daily Gold Bull 3X Shares (BAR) exchange-traded fund based on the recommendation of Direxion Asset Management LLC, the fund's sponsor.

Due to the fund's inability to attract sufficient investment assets, Direxion believes the fund cannot continue to conduct its business and operations in an economically efficient manner. As a result, Direxion concluded that liquidating and closing the fund would be in the best interests of the fund and its shareholders.

Shares of the Fund will stop trading on the NYSE Arca Inc. and will no longer be open to purchase by investors after the close of regular trading on June 19, 2015. Shareholders may sell their holdings in the fund prior to June 19 and those transactions may be subject to customary brokerage charges. Between June 22 and June 26 shareholders may be able to sell their shares only to certain broker-dealers and there is no assurance that there will be a market for the fund during that time.

This gold-related story appeared on the Internet site on Tuesday---and it's another article I found on the Internet site yesterday.

View full GSD edition

Could South Africa’s gold mining industry be gone by 2020?

The South African mining industry is in trouble. That is not in question. The only debatable point is exactly how much trouble it is in.

The industry on which this country’s modern economy was built has been stuttering since the global financial crisis. What investors and anyone else with an interest in mining’s role in the economy wants to know, is where this is headed.

Are we nearing a point where we will start to see a turnaround? Or is there a chance that things will simply continue to deteriorate?

Speaking at the JSE’s Power Hour in Cape Town, Peter Major, mining specialist at Cadiz Corporate Solutions, warned that one must be wary of thinking that things will always revert to an historically established mean. The mining environment in South Africa has changed so much over the last few decades that “the old rules no longer apply”.

Well, dear reader, as long as these so-called experts and current crop of mining executives don't get on stick pretty soon, ALL of the world's precious metal miners are going to be heading in the same direction.  I know for a fact that there isn't a mining executive out there that doesn't know that the metals they mine isn't being managed by JPMorgan et al.  They just won't do anything about it.

This article was posted on the Internet site yesterday afternoon London time---and it's worth reading.

View full GSD edition

May 27, 2015

The world is drowning in debt, warns Goldman Sachs

The world is sinking under too much debt and an ageing global population means countries' debt piles are in danger of growing out of control, the European chief executive of Goldman Sachs Asset Management has warned.

Andrew Wilson, head of Europe, Middle East and Africa (EMEA), said growing debt piles around the world posed one of the biggest threats to the global economy.

"There is too much debt and this represents a risk to economies. Consequently, there is a clear need to generate growth to work that debt off but, as demographics change, new ways of thinking at a policy level are required to do this," he said.

"The demographics in most major economies – including the US, in Europe and Japan - are a major issue – and present us with the question of how we are going to pay down the huge debt burden. With life expectancy increasing rapidly, we no longer have the young, working populations required to sustain a debt-driven economic model in the same way as we've managed to do in the past."

This story from The Telegraph is datelined at 6:25 p.m. BST yesterday evening, which is a pretty neat trick considering that our man in Greece, Harry Grant, sent it to me at 5:37 a.m. EDT yesterday morning, so it's obviously been edited in the interim.

View full GSD edition

El-Erian: Correction in stocks could happen if…

There could be a "big air pocket" in stocks if fundamentals, at some point, don't validate valuations, Mohamed El-Erian said Tuesday.

The market has been supported by "ultra-loose" monetary policy around the world and cash from corporate balance sheets being put to work in the form of dividends, buybacks and mergers and acquisitions, Allianz' chief economic adviser said on CNBC's "Squawk Box."

While the Federal Reserve will probably hike interest rates this year for the first time in nearly a decade, El-Erian advised investors against obsessing over it.

This 4:11 minute CNBC video clip, along with a transcript, appeared on their website at 8:40 a.m. EDT yesterday morning---and I thank Dan Lazicki for his first story of the day.

View full GSD edition

JPMorgan Chase Writes Arrogant Letter to Its Swindled Forex Customers

As the U.S. Department of Labor deliberates giving JPMorgan Chase a waiver to continue business as usual after it pleaded guilty to a felony charge for engaging in a multi-bank conspiracy to rig foreign currency trading, a letter the bank sent to its foreign currency customers should become Exhibit A in the deliberations. The letter effectively tells JPMorgan’s customers, here’s how we’re going to continue to rip your face off.

Two sections of the letter stand out in particular. One section reads:

“As a market maker that manages a portfolio of positions for multiple counterparties’ competing interests, as well as JPMorgan’s own interests, JPMorgan acts as principal and may trade prior to or alongside a counterparty’s transaction to execute transactions for JPMorgan…” (Italic emphasis added.)

I posted the JPMorgan "I'm so sorry" letter in Tuesday's column, or on Saturday---and here's what the good folks over at the Internet site had to say about it yesterday.  I thank Richard O'Mara for sending it along.

View full GSD edition

JPMorgan’s Guilty Plea Puts Wealth Unit in Spot With Regulators

JPMorgan Chase & Co. put allegations of currency-fixing largely behind it with a guilty plea, but it’s not out of the woods yet.

With its new felony record, America’s biggest bank needs to seek the Department of Labor’s permission to keep managing money in the $8 trillion private pension market. At the same time, there’s a cloud over the JPMorgan unit where pensions are managed: The Securities and Exchange Commission is well along in an investigation into conflicts of interest in the bank’s wealth-management unit, whose products include individual retirement accounts.

That puts the bank in a sticky position -- arguing that a criminal conviction shouldn’t keep it from managing Americans’ retirement savings, while the SEC is investigating possible wrongdoing in the same division.

“When a bank has enforcement action after enforcement action, it becomes hard to argue that it won’t happen again,” says Urska Velikonja, an assistant law professor at Emory University whose research focuses on securities law.

Of course there will be no end to it, but the precious metal price management scheme is still the 1,000 pound gorilla in the living room.  This Bloomberg article showed up on their website at 3:00 a.m. Denver time on Tuesday morning---and it's the first offering of the day from West Virginia reader Elliot Simon.

View full GSD edition

After a Political Reversal in Alberta, ‘Anything Seems Possible’

This is the Canadian province known for oil, cowboys and rodeos, and as the adopted home of Prime Minister Stephen Harper, whose Conservative Party has long dominated politics.

So it seemed especially jarring when a boisterous crowd in this bastion of conservative voting known as Canada’s Texas celebrated its new premier this weekend: a woman regarded by much of the country as a leftist who vows to take on big oil and champion the poor.

The 51 newly elected New Democratic Party members who sat behind the premier, Rachel Notley, their leader, in the swearing-in ceremony on Sunday did not resemble typical revolutionaries. Largely political novices, they dressed like junior bank managers. They include nurses, a phone technician and a yoga instructor.

The ceremony on the steps of the Alberta provincial legislature, cheered by members of a large and enthusiastic crowd who could have easily passed for hockey fans celebrating a rare Edmonton Oilers victory, signified an exceptional moment in politics in both Alberta and Canada.

Yep---and if I were Prime Minister Stephen Harper, I'd be shaking in my boots right now, as the Canadian people are just itching to give this guy, along with the rest of the Federal conservatives, the old 'heave ho'---and they'll have their chance this fall.  This is another article from The New York Times.  This one was posted on their website on Monday---and I thank Roy Stephens for sending it along.

View full GSD edition

Vancouver: Real estate ‘pandemonium’

Mortgage broker David Ford thinks he has found the right way to describe the Lower Mainland’s market for single-family homes.

“Detached housing is BANANAS.

“It’s real estate pandemonium,” he writes in his latest Shop Talk newsletter for clients, realtors and financial advisers.

It’s not just single-family homes that are hot. Vancouver Mayor Gregor Robertson and former wife Amy received five offers recently for their 1,666-square-foot Stephens St. half-duplex in Kits with ocean views, purchased in 2013 for $1.57 million. Listed for $1.798 million. Sold for $1.982 million.

This story showed up on The Vancouver Sun website yesterday---and it's the second offering in a row from Roy Stephens.

View full GSD edition

Germany sees progress on Greece, E.U. officials to confer on Thursday

A senior German official said on Tuesday there was no reason to believe Greece would be in default after a 300 million euro payment to the IMF falls due on June 5.

Separately, euro zone officials said deputy finance ministers would hold a teleconference on Thursday to follow up on days of negotiations between representatives of Greece and creditors the International Monetary Fund (IMF), the European Central Bank and the European Commission.

Greece must repay four loans totaling 1.6 billion euros ($1.76 billion) to the IMF next month, starting with a 300 million euro payment on June 5.

If no deal is reached within EU/IMF for new loans to be disbursed to Athens, Greece is likely to default on the IMF loan repayment. This would start a process that could lead Greece out of the euro zone.

Will they?---Won't they?  What a soap opera.  This Reuters article co-filed from Berlin and Brussels, put in an appearance on their Internet site at 11:00 a.m. EDT yesterday morning---and it's the second offering of the day from Elliot Simon.

View full GSD edition

With Money Drying Up, Greece Is All but Bankrupt

Bulldozers lie abandoned on city streets. Exhausted surgeons operate through the night. And the wealthy bail out broke police departments.

A nearly bankrupt Greece is taking desperate measures to preserve cash. Absent a last-minute deal with its creditors, the nation will run out of money early next month.

Two weeks ago, Greece nearly defaulted on a debt payment of 750 million euros, or about $825 million, to the International Monetary Fund.

For the rest of this month, Greece should be able to cover daily cash deficits of around 100 million euros, government ministers say. Starting June 5, however, these shortfalls will rise sharply, to around 400 million euros as another I.M.F. obligation comes due. They will then double in size on June 8 and 9.

This article, filed from Athens, appeared on The New York Times website on Monday sometime---and it's another contribution from Elliot Simon.  David Stockman gave it the headline "At the Street Level, Greece is Grinding to a Halt".

View full GSD edition

Russia Officially Gives Up on Mistral Deal

Moscow has finally given up on the Mistral deal. Now Russia and France will discuss only the sum that Paris should pay Russia for the failed contract.

During the negotiations on the Mistral deal Russia and France have discussed only one question — the sum of the compensation.

"We switch the conversation to business — give us our money back… We're now discussing just one thing — the exact sum of money France owes Russia," Oleg Bochkaryov, a deputy chairman of the Russian Military Industrial Complex said.

Russia and France signed a $1.3-billion deal for two Mistral-class helicopter carriers in 2011. The handover of the first ship to Russia was scheduled for November 2014, but never happened. French President Francois Hollande put the delivery on hold due to Moscow's alleged interference in the Ukrainian crisis.

This news item appeared on the Internet site at 5:02 p.m. Moscow time on their Tuesday afternoon, which was 10:02 a.m. EDT in Washington.  It's courtesy of Dan Lazicki.  The Zero Hedge spin on this is headlined "Russia Tells France It Gives Up on Mistral Ship Deal"---and it's also courtesy of Dan L.

View full GSD edition

Muslim world reacts to Obama's latest speech

This 2:20 minute video clip appeared on Egyptian television last week---and it falls into the absolute must watch category.  I could hardly believe what I was hearing---and I thank reader U.D. for passing it around yesterday.

View full GSD edition

ISIS rise provoked by outside interference into Middle East, North Africa – Putin

There was previously no terrorism in countries where Islamic State militants “now prosper” until outside forces “not sanctioned by the UNSC” interfered, Russian President Vladimir Putin said, stressing the “serious consequences” that followed.

“We know what is happening, for example, in the Middle East, in North Africa; we know the problems associated with a terrorist organization, which has appropriated the right to be called the ‘Islamic State” (IS, formerly ISIS/ISIL),” Putin said during a meeting with security officials from the BRICS block in Moscow.

“But there was no terrorism in the countries where it [IS] flourishes today before an unacceptable interference from the outside happened, not sanctioned by the Security Council of the United Nations,” he stressed.

Russia’s president describe the consequences of such interference as “serious,” with the Islamic State currently controlling territory in Syria, Iraq, Libya, Lebanon, Afghanistan and Nigeria.

This news item showed up on the Russia Today website at 9:37 p.m. Moscow time on their Tuesday evening---and I thank Roy Stephens for sending it along.

View full GSD edition

Saudi Arabia, partners turn down Chinese requests for extra oil

Saudi Arabia and its main Middle East OPEC partners are turning down Chinese requests for extra oil as they hold back fuel for their own refineries just as demand from the world's biggest crude importer hits new records.

While the Saudi and other refusals for additional crude supplies may not be part of a new pricing strategy, the rejections to their biggest client help explain a 40 percent rise in oil prices this year as Chinese importers have had to seek more oil from other suppliers in what analysts say is still an oversupplied market.

Saudi Arabia "used to provide as and if we asked for extra cargoes on top of contract during the first four months of the year, but not for May and June," said a trader with one of China's biggest oil importers on condition of anonymity as he had no permission to talk to media.

Another source with a Chinese refinery that takes Saudi oil said Saudi heavy crude was "a bit tight" in May and June.

This Reuters article, co-filed from Beijing and Singapore, was posted on their website a week ago today---and I thank Orlando, Florida reader Dennis Mong for sharing it with us.

View full GSD edition

Iraq About to Flood Oil Market in New Front of OPEC Price War

Iraq is taking OPEC's strategy to defend its share of the global oil market to a new level.

The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout. The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5.

While shipping schedules aren't a promise of future production, they are indicative of what may come.

This Bloomberg article showed up on their Internet site at 8:37 a.m. EDT yesterday morning---and I thank International Man senior editor Nick Giambruno for passing it around yesterday.

View full GSD edition

China's currency 'no longer undervalued,' IMF says, clearing entry to SDRs

The International Monetary Fund has declared that China's currency is "no longer undervalued," marking a significant shift after more than a decade of criticism of Beijing's tight management of the renminbi.

The move amounts to a major vote of confidence in Beijing and the renminbi at a critical time. It also puts the IMF at odds with its biggest shareholder, the United States, which insists that China continues to draw an unfair trade advantage from a renminbi that it considers "significantly undervalued."

The renminbi has gained 25 per cent against the US dollar since it was allowed to adjust upward within a narrow band a decade ago, and has held its value even as the dollar has strengthened against other major currencies over the past year.

Eswar Prasad, the former head of the IMF's China unit, said the shift by the fund was important as it marked the first time since the Asian financial crisis of the late 1990s that the fund had not deemed the renminbi to be undervalued. It also presaged the likely adoption later this year of the renminbi as one of the small number of major currencies in a basket used to determine the value of the IMF's de-facto currency, the Special Drawing Rights.

This is only part of the story that appeared on the Financial Times website yesterday.  There's a bit more in the GATA release, but you'll have to go to the FT site for the rest---and a subscription is required.  The part that's posted in the clear is worth reading.

View full GSD edition

Texas Senate Passes Bill to Establish Bullion Depository, Help Facilitate Transactions in Gold and Silver

A bill taking a step towards gold and silver as commonly-used legal tender in Texas passed in the state Senate today by an overwhelming 29-2 vote.

Introduced by State Rep. Giovanni Capriglione (R- Southlake) and four co-sponsors on Feb. 12, House Bill 483 would create a state bullion depository.

What the bill essentially does is create a means for transactions to occur in precious metals. It allows people  to open an account and deposit their precious metals in the state depository. They could then use the electronic system to make payments to any other business or person who also holds an account.

This opening of the market is considered by many insiders to be the most important first step towards bringing sound money to mainstream acceptance.

This news item, filed from Austin yesterday, appeared on the Internet site---and it's something I found over at Sharps Pixley in the wee hours of this morning.

View full GSD edition

MIT developing platinum replacement

Fears of a looming crunch in platinum supply, driven mainly by a four-month-long ongoing strike at the world’s top producers of the metal in South Africa, may be about to fade.

MIT graduate student Sean Hunt, postdoc Tarit Nimmandwudipong, and Yuriy Román, an assistant professor of chemical engineering, are working on a new process to replace platinum-group metals (PGMs) with more widely available elements in renewable energy technologies.

In a paper published last week in the journal Angewandte Chemie, the team explains their proposed new method for synthesizing alternative catalysts.

This is another one of those cases of "I'll believe it when I see it!"  This short article was posted on the Internet site  back on May 18---and I thank Patrick Leavens for sending it our way.

View full GSD edition

Platinum price: The cheese and biscuits analogies -- Lawrence Williams

Platinum has been in a large deficit for the last two to three years – and a substantial one at that, last year in particular with the five-month long platinum miners’ strike in South Africa taking perhaps a further 1 million ounces away from the production picture. But, over this same period, the price has not risen, but has fallen, thus seemingly being counter to the normal supply/demand process.

An interesting panel discussion at last week’s Bloomberg Precious Metals Forum in London did not see an immediate end to this price malaise, although looking further ahead did feel there would be a stage when fundamentals would start to impact price positively. Panel members were David Jollie of Mitsui Global Precious Metals, Jonathan Butler of Mitsubishi and James Steel of HSBC, ably led by Rupen Raithatha of Johnson Matthey who had previously given the audience insights on the very significant demand for platinum in the Chinese jewellery sector.

The weak price has been all to do with the levels of above-ground stocks which some had put at over 4 million ounces, which meant there has been adequate supply out there to service demand. This without impacting positively on the price which, if anything, has allied itself to the fortunes of the gold price however illogical this might be. Indeed it was felt that we may still not yet have seen the platinum price lows if gold hits a spot of further weakness as some analysts have been predicting. Although platinum is very much an industrial metal, it is also classified by the markets as a precious metal and all the precious metals complex tends to move, to an extent at least, with the upwards and downwards movements in the gold price.  This in turn seems to move due to the huge speculative element played out for the moment primarily on the COMEX futures market.

This commentary by Lawrie appeared on the Internet site mid-afternoon BST in London---and if you're a PGM fan, this is worth reading.

View full GSD edition

Don’t Believe Everything You Read On The Internet -- Koos Jansen

Recently a website called Want China Times published a story titled, “China Could Crash U.S. Dollar With 30,000 Tons Of Gold: Commentary”. I would like to share my opinion on this story about the Chinese gold market that has directly or indirectly reached many readers.

Alasdair Macleod has written an article in 2014 stating “the Chinese state has probably accumulated between 20,000 and 30,000 tonnes since 1983”. In my humble opinion this estimate is based on no evidence, but you can read the article and make up your own mind. Now, was the 30,000 tonnes number conceived by MacLeod or Jin? The only source I could find on the 30,000 tonnes number is MacLeod’s estimate. In a new Chinese jacket (Duowei, Jin) the story was transformed and made additional rounds. (if someone else has an additional source I would love to read it, please comment below.)

Starting from BWChinese via Duowei and Want China Times the 30,000 tonnes story was re-ignited and has spread over the internet. Shortly after Russian website published, “China Saves Up 30,000 Tons Of Gold To Topple US Dollar From Global Reign”. Pravda did not include any links, but they mention Duowei as the source (so again, this was MacLeod’s estimate). Sputnik published "Dragon Rising: China's Gold Will Break World's Dependence on the U.S. Dollar".

This very interesting commentary appeared on the Internet site yesterday---and it's worth reading.  I thank Koos for sending it our way.

View full GSD edition

Russia acquires gold as defense against 'political risks,' central banker explains

Russia is increasing its gold holdings because gold is a reserve asset free from legal and political risks, a senior central banker said on Tuesday.

The comments by Dmitry Tulin, who manages monetary policy at the central bank, reflect Russian fears that the country's overseas assets could be frozen as part of a possible toughening of Western sanctions over the Ukraine crisis.

"As you know we are increasing our gold holdings, although this comes with market risks," Tulin told lawmakers in the lower house of parliament. "The price of it swings, but it is a 100-percent guarantee from legal and political risks."

This Reuters article from late Tuesday morning EDT was something I found in a GATA release.

View full GSD edition

Gold smuggling in India rises 900% to record

For the first time in the history of gold smuggling in India, the seizure in illicit trade has crossed the rupees 1,000 crore mark in one financial year with customs, police, and revenue agencies seizing more than 3,500 kilograms of gold in 2014-15.

In 2012-13 the same figure stood at merely Rs 100 crore with just about 350 kilograms of gold seized. In two years, since the government increased duty on gold to 10 percent to rein in a yawning current account deficit, gold smuggling has grown by 900 percent.

Since as an accepted principle seizures could be less than 10 percent of actual smuggling, the figures look even more ominous.

Sources say gold has also begun to be smuggled in unique ways and from rather unexpected corners.

This article showed up on the Times of India website at 4:31 a.m. IST on their Wednesday morning---and I found this one the Internet site yesterday.  It's worth reading.

View full GSD edition

Turn out the lights: Australia calls commodity spending boom end

Gold miners are spearheading a wave of merger and acquisition activity in Australia, riding a rebound in local gold prices to pounce on projects promising quick growth.

In the first signs of life since the country’s mining boom went bust three years ago, companies are buying assets from international rivals tightening their belts, and partnering with fellow Australian miners.

“Everyone is looking for assets that enable them to grow. We’ve seen more M&A in Australia in 2015 than in the past five years,” Ian Murray, chairman of Perth-based Gold Road Resources Ltd told Reuters, referring broadly to the level of interest in the sector.

Progressive central bank interest rate cuts aimed at knocking down the Australian dollar and falling labour and mining costs are adding fuel to the frenzy.

This Reuters article appeared on the Internet site yesterday morning BST---and I found it all by myself.

View full GSD edition

May 26, 2015

Did Someone Forget to Tell the Machines the U.S. is Shut Today?

"Unrigged"... European weakness - on the heels of increasing event risk and slowing ECB purchases - provided downward impetus to global risk assets this morning... but the machines rigging running U.S. equity futures appears to have forgotten that the U.S. markets are shut and sparked the ubiquitous rampathon back to unchanged for S&P futures (on less than 10% of daily average pro-rata volume).

The same can be said of the trading in gold and silver yesterday as well.  This tiny Zero Hedge article has a must see chart embedded, so it's worth 30 seconds of your time.

View full GSD edition

Don Coxe: Bull Market in Bonds Now Ending - Risks Ahead

Don Coxe, Chairman of Coxe Advisors, called the dawn of the bull market in bonds in 1981. Now, 34 years later, he sees it ending as bonds enter their final mania phase marked by negative interest rates. Don discusses this historic period we are now in and both the risks and opportunities he sees ahead.

This excellent transcript, plus an embedded 6:27 minute video clip, appeared on the Internet site on Friday---and it's definitely worth your while.  I thank Casey Research's own John Grandits for passing it around on Sunday afternoon.

View full GSD edition

Dr. Dave Janda interviews your humble scribe

The good doctor and I spent 25 minutes talking about the banks in general---and JPMorgan in particular---on Sunday afternoon.  Of course we also spent some time talking about the precious metals as well.  It was posted on the Internet site yesterday.

View full GSD edition

Ferguson Protesters Now Protesting Over Not Getting Paid

At least some of the protesters who looted, rioted, burned buildings and overturned police cars in Ferguson, Missouri, last year were promised payment of up to $5,000 per month to join the protests.

However, when the Missourians Organizing for Reform and Empowerment (MORE), the successor group to the now-bankrupt St. Louis branch of ACORN (Association of Community Organizations for Reform Now), stiffed the protesters, they launched a sit-in protest at the headquarters of MORE and created a Twitter page to demand their money, The Washington Times reports.

Presidential candidate and former Rep. Allen B. West, [R-Fl.], noted on his website, "Instead of being thankful for getting off the unemployment line for a few weeks and having a little fun protesting, the paid rioters who tore up Ferguson, MO, are protesting again."

"First of all, can you even imagine getting paid $5,000.00 a month for running around holding a sign and burning down an occasional building? That's around $1,250.00 per week. Try making that at McDonalds or Starbucks."

MORE is funded by liberal billionaire George Soros, the Times notes, through his Open Society Foundations (OSF).

Only in America.  This amazing story appeared on the Internet site at 3:07 p.m. EDT on Memorial Day---and it's another contribution from reader U.D.  It's definitely worth reading.

View full GSD edition

Businesses quietly turn to the dollar in fiercely anti-American Venezuela as currency crashes

It's still possible to buy a gleaming Ford truck in Venezuela, rent a chic apartment in Caracas, and snag an American Airlines flight to Miami. Just not in the country's official currency.

As the South American nation spirals into economic chaos, an increasing number of products are not only figuratively out of the reach of average consumers, but literally cannot be purchased in Venezuelan bolivars, which fell into a tailspin on the black market last week.

Businesses and individuals are turning to dollars even as the anti-American rhetoric of the socialist administration grows more strident. It's a shift that's allowing parts of the economy to limp along despite a cash crunch and the world's highest inflation. But it could put some goods further out of reach of the working class, whose well-being has been the focal point of the country's 16-year-old socialist revolution.

This AP story was picked up by the Internet site at 1:45 p.m. EDT yesterday---and I found it on the Internet site.

View full GSD edition

Banks brace for more foreign exchange rigging pain as civil lawsuits come forth

Banks are bracing for hundreds of millions of pounds in new claims for foreign exchange manipulation from class-action lawsuits triggered by last week’s vast market rigging fines.

Barclays, Royal Bank of Scotland and four other banks were ordered on Wednesday to pay $6bn (£3.84bn) by U.K. and U.S. authorities.

The Barclays penalty represents the biggest bank fine in British history.

The regulators, detailing how traders gathered in chat rooms using monikers such as “The Cartel” and “Coiled cobra” to rig the $5.3 trillion-a-day currency market, also forced the banks to plead guilty to criminal charges.

Lawyers say that the fines, as well as an investigation from the European Commission, could be a springboard to damaging civil litigation in the U.K. and Europe.

This article put in an appearance on the Internet site at 7:46 p.m. London time on their Saturday evening---and I found it embedded in a GATA release.

View full GSD edition

E.U. parliament cracks down on shell firms

People trying to hide their money in shell companies will face greater scrutiny following a new law adopted Wednesday (20 May) by the European Parliament.

Initially proposed at the start of 2013, the bill - also known as the fourth anti-money laundering directive - proposed to crack down on money laundering, terrorist financing, and to improve ways of tracing illicit transfers.

A political agreement with member states was reached last December.

MEPs expanded on it, making it more difficult for fraudsters and other criminals to hide behind shell companies to avoid paying taxes or to launder income from criminal activities. Member states have two years to transpose the rules into their national laws.

This story, filed from Brussels, showed up on the Internet site last Wednesday---and the reader that sent it to me wishes to remain anonymous.

View full GSD edition

Spain's ruling party punished in local elections

Voters in Spain’s two biggest cities have put the leaders of new and untried citizens’ platforms in pole position to become their mayors as the results of Spain’s local and regional ballots on Sunday reveal a highly fragmented political scene ahead of a general election due at the end of the year.

Barcelona en Comú, whose city council candidates were supported by anti-austerity movement Podemos and the Left-wing Catalan Green party, won 11 councillors with 25 per cent of the vote, narrowly ahead of the CiU Catalan nationalist grouping of current city mayor Xavier Trias, which picked up 10 seats out of 41 available.

Barcelona en Comú leader Ada Colau, formerly known as an anti-eviction campaigner, has promised a drastic reduction in perks for councillors and an emergency anti-poverty plan for the city’s poor and marginalised. “It’s a David versus Goliath victory,” a tearful Mrs Colau said as the result came in.

“We said it could be done, and we’ve proven it,” said Mrs Colau. “We are an unstoppable democratic revolution.”

This story appeared on The Telegraph's website just before midnight BST on Sunday evening---and I thank Roy Stephens for sharing it with us.

View full GSD edition

Greece to miss IMF payments amid fears of 'catastrophic' eurozone rupture

Greece will be unable to find the €1.6bn (£1.1bn) sum it is due to hand the International Monetary Fund (IMF) next month, one of the country’s ministers has admitted.

Nikos Voutsis, the Greek minister of the interior, said that “this money will not be given and is not there to be given”, speaking on Mega TV. The Greek state is due to hand over the money in four installments in June, as part of its obligations for its 2011 bail-out.

Mr Voutsis’ comments came as Yanis Varoufakis, the Greek finance minister, told The Andrew Marr Show that if progress was not made, it would be the beginning of the end for the euro project.

This is another story from the Internet site.  It showed up there at 10:50 a.m. BST on Sunday morning---and it's the second story in the row from Roy Stephens.  Our man in Greece, Harry Grant, sent us the Zero Hedge spin on all this headlined "Greece Is on the Ragged Edge: Bloodied Ideologues vs. Bloodthirsty Technocrats".  And here's another story on Greece from The Telegraph.  This one's from Monday morning BST---and it's headlined " Greece begs for leniency as investors warn 'time for complacency' on collapse is over"---and it's courtesy of Roy Stephens as well.

View full GSD edition

No to Brussels, Yes to Kiev: New president sets course for more independent Poland

Youthful energy and rhetoric for change have seen Andrzej Duda transformed from a virtual unknown to the rising star of Eastern European politics – but his presidency could set Poland against Russia and the E.U.

On Sunday, 51.6 percent of the electorate cast their votes for Duda to replace the centrist incumbent Bronislaw Komorowski, with a turnout of 55.4 percent, according to the official results. Exit polls showed that over 60 percent of rural voters supported Duda, but only about 40 percent of those live in cities.

Like the last president from the Law and Justice party and Duda’s idol, the late Lech Kaczynski, who held the office from 2005 to 2010, the new Polish leader won by appealing to voters from the traditional heartlands – Catholics, social conservatives, farmers, and those left behind by Poland’s superficially stellar economic performance in the last decade.

This story was posted on the Russia Today website at 9:52 p.m. Moscow time on their Monday evening, which was 2:52 p.m. EDT in Washington.  It's also courtesy of Roy Stephens.

View full GSD edition

Ukraine crisis: Rebel commander Alexei Mozgovoi 'killed'

One of the top rebel commanders in eastern Ukraine, Alexei Mozgovoi, has been killed in an attack on his car, Russian and Ukrainian media report.

Mr Mozgovoi led the "Prizrak" (Ghost) battalion which was based in the Alchevsk area of Luhansk.

Reports said a bomb struck his car, which was then targeted by gunfire that killed Mozgovoi and six others.

Mr Mozgovoi was a critic of the Russian-backed separatist leadership and the Minsk accord signed with Kiev.

This story put in an appearance on the website on Saturday sometime---and I thank Jim Skinner for sending it along.

View full GSD edition

Putin signs bill on ‘undesirable foreign groups’ into law

The Russian president has signed a bill banning the activities of foreign groups that pose a threat to national security or defense capability, and to punish those who continue to cooperate with such groups.

The bill, initially drafted by two opposition MPs, was passed by both chambers of the Russian parliament last week. It tasks the Prosecutor General’s Office and the Foreign Ministry with creating a proscribed list of “undesirable foreign organizations” and to outlaw their activities in the country. The main criterion for putting a foreign or international NGO on the list is a “threat to the constitutional order and defense capability, or the security of the Russian state.”

Once the group is recognized as undesirable, all its assets in Russia must be frozen, its offices closed and distribution of any of its information materials must be banned.

No surprises here, as foreign-sponsored NGO's, mostly U.S., have been working in many countries to overthrow their current governments.  This news story was posted on the Russia Today website at 9:52 a.m. Moscow time on their Monday morning, which was 2:52 a.m. EDT in Washington.  There was also a Fox News item on this headlined "Putin signs Russian law to shut down 'undesirable' organizations"---and it's courtesy of Brad Robertson.

View full GSD edition

City in the sky: world's biggest hotel to open in Mecca

The holy city is fast becoming a Las Vegas for pilgrims.

Four helipads will cluster around one of the largest domes in the world, like side-plates awaiting the unveiling of a momentous main course, which will be jacked up 45 storeys into the sky above the deserts of Mecca. It is the crowning feature of the holy city’s crowning glory, the superlative summit of what will be the world’s largest hotel when it opens in 2017.

With 10,000 bedrooms and 70 restaurants, plus five floors for the sole use of the Saudi royal family, the £2.3bn Abraj Kudai is an entire city of five-star luxury, catering to the increasingly high expectations of well-heeled pilgrims from the Gulf.

Modelled on a “traditional desert fortress”, seemingly filtered through the eyes of a Disneyland imagineer with classical pretensions, the steroidal scheme comprises 12 towers teetering on top of a 10-storey podium, which houses a bus station, shopping mall, food courts, conference centre and a lavishly appointed ballroom.

“The city is turning into Mecca-hattan,” says Irfan Al-Alawi, director of the UK-based Islamic Heritage Research Foundation, which campaigns to try to save what little heritage is left in Saudi Arabia’s holy cities. “Everything has been swept away to make way for the incessant march of luxury hotels, which are destroying the sanctity of the place and pricing normal pilgrims out.”

This very interesting article showed up on The Guardian website on Friday afternoon BST---and it's the second contribution in a row from reader Brad Robertson.

View full GSD edition

‘Titanic’ Global Economy May “Collapse” Warn HSBC – Gold Is Lifeboat

The chief economist of the world’s third largest bank, HSBC’s Stephen King, has compared the global economy to the Titanic.

In a note to clients on Wednesday he wrote We may not know what will cause the next downswing but, at this stage, we can categorically state that, in the event we hit an iceberg, there aren’t enough lifeboats to go round.

“The world economy is like an ocean liner without lifeboats.” As we have been warning in recent months, when another recession arrives, governments do not have the ability or the reserves to prop up the economy like they did in 2008.

Global debt has soared by 40 percent since the Great Recession. We now have a staggering $200 trillion of debt globally, or almost three times the size of the global economy. It would be a “truly titanic struggle” for policymakers to right the economy, King said.

This commentary by Mark O'Byrne over at the Internet site on Friday was something I meant to stick in Saturday's column, but completely forgot about---so here it is now.  If you haven't already, it's worth reading.  Here's The Telegraph's spin on this, courtesy of Ambrose Evans-Pritchard.  It's headlined "HSBC fears world recession with no lifeboats left"---and I thank Roy Stephens for finding it for us.

View full GSD edition

60 countries invest in Chinese fund to facilitate central bank gold purchases

A gold-sector fund involving countries along the ancient Silk Road has been set up in northwest China's Xi'an City during an ongoing forum on investment and trade this weekend.

The fund, led by the Shanghai Gold Exchange, is expected to raise an estimated 100 billion yuan (U.S. $16.1 billion) in three phases.

China is the world's largest gold producer and a major importer and consumer of gold. Among the 65 countries along the routes of the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, there are numerous Asian countries identified as important reserve bases and consumers of gold.

About 60 countries have invested in the fund, which will in turn facilitate gold purchases for the central banks of member states to increase their holdings of the precious metal, according to the SGE.

This gold-related item, filed from Xi'An in China, appeared on the Internet site at 6:18 p.m. Beijing time on their Saturday evening.  I found it in a GATA release.  Koos Jansen also has something on this---and it's headlined "Xinhua: China Sets Up Gold Fund For Central Banks".  His comments are a must read.  The Zero Hedge spin on this is entitled "China Establishes World's Largest Physical Gold Fund"---and it's courtesy of reader M.A.

View full GSD edition

Australian gold production falls in first quarter of 2015

Australian gold production fell by 7 per cent in the first quarter of this year.

Less than 70 tonnes of the precious metal was pulled from the ground in the first three months of 2015, according to mining consultancy firm Surbiton Associates.

Director Dr. Sandra Close said the low figure was in part due to a number of shutdowns, wet weather and fewer production days from January to March.

"March is usually the lowest quarter of the year anyhow, but overall both the grade and tonnage of ore treated was lower this quarter than for December and there are quite a few reasons for that happening, in fact," she said.

This gold news item was posted on the Australia Broadcasting Corporation website on Sunday "down under"---and I thank South African reader B.V. for digging it up for us.

View full GSD edition

1,000 platinum-powered Hyundais in UK this year – Amplats

Fuel cell electric vehicles will allow platinum mining to build its future in a truly sustainable way on the back of zero exhaust emissions and the use of the world’s endless supply of hydrogen as a fuel source, Anglo American Platinum (Amplats) CEO Chris Griffith has told Platinum Week 2015 in London.

Griffith said this against the background of Korean automotive manufacturer Hyundai targeting the production of 1,000 ix35 fuel cell vehicles in the U.K. by the end of this year.

Highlighting the need for continuous industry collaboration with customers and nontraditional partners to develop uses for platinum-group metals (PGMs), Griffith outlined that if fuel cell cars succeeded in dominating the electric vehicle segment in Europe, platinum demand within Europe would rise to 6.6-million ounces in 2050.

Conversely, if battery cars dominated, demand for platinum within Europe would decline to 2.5-million ounces in the same period.

This article, filed from Johannesburg, appeared on the Internet site yesterday---and it's the second offering in a row from reader B.V.

View full GSD edition

Above-ground platinum stocks unlikely to reach zero

Above-ground inventories of platinum are unlikely ever to reach zero, World Platinum Investment Council CEO Paul Wilson predicted.

Sizeable above-ground stocks are often cited as the primary reason for platinum’s failure to react to the current fundamental deficit.

“[But] they certainly don’t need to reach zero for sentiment to change and there could be a change to the price level in the marketplace,” he told delegates at the Bloomberg and CME Precious Metals Forum here on Friday.

Prices are now down 50 percent at $1,150 since the all-time peaks hit in 2008 at $2,300. The metal recently struck its lowest since the post-peak crash during 2008/2009 at $1,080 per ounce.

It's hard to believe that the guy running the World Platinum Investment Council is as ignorant as his brethren in the gold and silver mining industry, but this story proves that he is.  Until the Big 8 traders, led by JPMorgan et al, who are currently short 115 days of world platinum production get out of Dodge, the price of that precious metal is going nowhere as well.  This story, which was posted on the website, found a home over at the Internet site yesterday.

View full GSD edition

As LME looks east, CME throws down challenge in west: Andy Home

The London Metal Exchange (LME) Asia festivities have just wrapped up in Hong Kong.

It is the third such annual event since the LME was bought by Hong Kong Exchanges and Clearing (HKEx) in 2012 and each year, it seems, the Asian gathering of the metals industry gets larger.

The grand old London lady of metals trading is all part of Charles Li's vision of positioning Hong Kong as the renminbi gateway between mainland China and international markets. The HKEx chief is confident the LME will help open up a commodities channel to complement the newly-opened Stock-Connect highway.

It's very much still an aspiration but LME Week Asia is where the foundation stones are being laid.

This opinion piece, filed from Singapore, appeared on the Reuters website last Friday---and I found it on the Sharps Pixley website just now.

View full GSD edition